The Atlantic Business Channel

Felix Salmon and I were on Marketplace today.

Jan 30 2009, 4:55PM

The worst stimulus proposal thus far

The Tax Policy Center on including an extension of the Alternative Minimum Tax patch in the stimulus bill:

Neither timely nor targeted; makes no sense as economic stimulus.

The Senate Finance Committee decided to include the AMT patch earlier this week. The proposal receives a grade of D-minus. The average grade looks to be about a C-plus. The whole report card is here.

Jan 30 2009, 4:02PM

The labor movement takes its pound of flesh

Every time the White House changes hands, there is a flurry of executive orders regarding things like funding overseas abortions and labor rules for federal contracting. Substantively, their impact is pretty limited, but they have broad symbolic value.

Obama signed the changes to labor provisions today:

-Require federal contractors to offer jobs to current workers when contracts change.
-Reverse a Bush administration order requiring federal contractors to post notice that workers can limit financial support of unions serving as their exclusive bargaining representatives.
-Prevent federal contractors from being reimbursed for expenses meant to influence workers deciding whether to form a union and engage in collective bargaining.

As a matter of policy, it seems ridiculous to give federal contractors money to lobby against a union. On the other hand, taking down notices that workers have rights against the union seems to be frankly pandering. The rhetoric about unions always focuses on the workers, but an awful lot of the actual policy seems designed to enhance, not the power of the workers over their employers, but that of the union over the workers.

Jan 30 2009, 3:30PM

The paradox of philanthropy

I have a short piece with the Guardian today about Bill Gates, who released his first annual letter on philanthropy earlier this week. One of the things I found admirable about the letter is that Gates has promised to increase his foundation's 2009 spending, despite the financial crisis:

In 2008, the foundation spent about $3.3bn, or 5% of its assets - the minimum requirement of the US tax authorities. But in 2009, the foundation plans to increase spending to 7% of its assets, or $3.8bn.

Jan 30 2009, 1:44PM

Jamie Dimon, Grim Reaper

From Clusterstock:

Let's talk about the JP Morgan Chase and Bernie Madoff story we mentioned yesterday. If we're following this correctly, it seems that starting in 2006 JP Morgan allowed investors to make bets on the performance of hedge funds that invested with Bernie Madoff. This basically means that JP Morgan was institutionally short Madoff, which is interesting in itself. What made JP Morgan think it could beat the guy who had over forty-years of steady results?
Even more interesting is the fact that JP Morgan initially hedged this bet against Madoff by investing $250 million of its own money with Madoff. And then, as late as last fall, it decided to take off this hedge. What happened in the fall of 2008 to make JP Morgan believe that the bets it had made against Madoff were now so safe that they didn't need to be hedged?
Perhaps the most tantalizing idea is that JP Morgan's withdrawal might have triggered the collapse of Madoff's fund. Recall that although Madoff claimed to be managing tens of billions of dollars, he actually had only a tiny fraction of those assets under his control. A seemingly small withdrawal the size of JP Morgan's $250 million could very well have left Madoff without liquidity to keep up his fraud.
We know that JP Morgan began to become very conservative with its assets last fall. It made collateral calls on Lehman Brothers and Merrill Lynch, requiring the investment banks to hand over billions. Those collateral calls more or less consigned those firms to death. So did JP Morgan also doom Madoff? It does look like Jamie Dimon's shop has played the role of the Grim Reaper all through this credit crisis.

Jan 30 2009, 1:39PM

Autism, vaccines and public choice

by Dr. Manhattan

Kevin Drum points us to the news that Alison Singer, the former spokeswoman for Autism Speaks, has resigned her post over the organization's continued support for research into the discredited autism-vaccine connection:

In general, I disagree with a policy that says, "Despite what this study shows, more studies should be done." At some point, you have to say, "This question has been asked and answered and it's time to move on." We need to be able to say, "Yes, we are now satisfied that the earth is round."

Jan 30 2009, 12:22PM

All you have to do is believe . . .

Ryan Avent writes about the possibility of an economic "placebo effect" from the stimulus.

Jan 30 2009, 10:45AM

Brooks on the stimulus

David Brooks offers five reasons not to like the stimulus. The first is:

The money spent on long-term domestic programs means there may not be enough to jolt the economy now (about $290 billion in spending is pushed off into 2011 and later). The money spent on stimulus, meanwhile, means there's not enough to truly reform domestic programs like health technology, schools and infrastructure. The measure mostly pumps more money into old arrangements.

I agree with Brooks's larger argument that the stimulus bill is trying to do too many things at once, but the above point seems mistaken. The advantage of pumping money into pre-established arrangements is that it's easier to spend quickly. I have the feeling that if the bill were trying to "truly reform" technology and infrastructure you would hear complaints about long it would take to get those grand, delusional plans off the ground. Could the administration win either way?

Jan 30 2009, 9:54AM

GDP falls, deflation looms

The new 4th quarter figures from the BEA are so shocking not because they are surprising, but because one couldn't quite believe one's own expectations:

Comments (1)

Jan 30 2009, 9:30AM

Not-for-profit newspapers

The money managers at Yale propose the idea, modeled after a financially successful university with a large endowment. (Perhaps they have Yale in mind.) Steve Coll seconds it, and Matt Yglesias offers his thoughts. One potential consequence is that this might kill off the newspaper editorial as we know is, since a 501(c)(3) can't endorse candidates or legislation. On balance that doesn't seem like such a bad thing. There isn't any shortage of free opinion on the internet.

But how would the newspapers generate their endowments? Williams College, which Steve Coll picks on, has what I presume are a lot of nostalgic alums. Does the New York Times have equally nostalgic readers? (Or maybe a harder case: Does the Cleveland Plain Dealer?)